Notable moderation in price inflation in urban centresOctober 1, 2019
Sherry FitzGerald, Ireland’s largest estate agents, announced this week that the average value of Irish established homes fell by 0.2% during the third quarter of 2019, however prices have increased by 0.3% in the year to date. This compares to growth of 3.7% recorded in the same period in 2018.
There has been a slight contraction in Dublin prices in the year to date, falling by 0.5% in the first nine months of the year. This compares to growth of 3.6% recorded in the same period in 2018.
When Dublin is excluded from the national figure, the increase is 1.4% in the year to date, compared to growth of 3.8% recorded in the same period in 2018.
In the regional centres outside of Dublin, Limerick recorded the highest increase at 3.3% during the year to date, while prices in both Galway and Cork increased by 1.2% and 0.6% respectively.
According to Marian Finnegan, Sherry FitzGerald; “The latest data on house price performance reveals a notable moderation in price inflation, particularly in Dublin and the other regional centres. At this juncture, it appears that the main reasons for this are the tight lending conditions in particular, combined with a more cautious consumer response to the geo-political situation”
The Property Price Register reveals that the total value of residential property, which transacted in the opening half of 2019 equalled €7.4 billion. Due to the time lag in logging data to the Property Price Register, quarter two data is the most accurate data available. If one excludes multi-family/portfolio sales, there was approximately 23,800 sales nationally in the opening six months, of which 7,500 were in Dublin.
In the twelve months to June 30th, the volume of sales grew by a very modest 4% nationally and 2% in Dublin. It is particularly notable that the total volume of new dwelling sales recorded on the Property Price Register increased by 7% nationally over the twelve-month period, while Dublin saw a reduction of 3%.
If one excludes multi-family and social property acquisitions the volume of sales to the private market increased by 1% nationwide and fell by 3% in Dublin. This reduction in sales in the private market is largely as a result of a notable increase in acquisitions that have been designated for social housing.
Approximately 87% of all new properties, which sold in the first half of 2019 were for less than €500,000 in value. This points to the continued success of the ‘Help to Buy’ scheme in delivering much needed starter homes into the market.
Comparatively, second-hand sales grew 5% year-on-year and 4% in Dublin in the twelve months to June 2019.
Comparing the Property Price Register data to mortgage drawdown data from the Banking and Payments Federation Ireland during the opening half of 2019 indicates that 38% of single property transactions did not have a mortgage attached to the transaction, signifying that these properties were likely to have been bought with cash. The comparable figure in 2018 was 41%.
On July 1st there were over approximately 23,200 properties for sale available nationwide, a 3% fall on the same date the year previous. Dublin saw a 7% increase in supply or an approximate 300-unit increase, with Fingal the only regional authority in Dublin not noting an increase. Rises in supply were also evident across much of Leinster, particularly amongst commuter counties, with Kildare, Meath and Wicklow all noting an increase of 8% or greater over the 12-month period.
Outside of Leinster, supply continues to contract with each of the three provinces recording a fall in stock. This includes the three regional centres of Cork, Limerick and Galway where supply fell 8%, 6% and 5% respectively. Overall the volume of advertised stock remains acutely low.
Owner occupier levels remained strong in the opening half of the year, accounting for 77% of all purchasers who bought through Sherry FitzGerald, compared to 73% during the same period in 2018. Notably first-time buyers accounted for 51% of all owner occupiers.
Finally, an analysis of vendor and purchaser profiles during the opening nine months of 2019, reveals a continued outflow of investors from the buy to let market. Reflecting the trends of recent years, 33% of vendors were selling their investment properties, while investors entering the market represented only 16% of purchasers. This has been a persistent trend in the lettings market for the last number of years, further diminishing the already depleted levels of supply of rental units.
In conclusion, Ms. Finnegan said; “The constraints in mortgage lending are having a very controlling influence on price growth and activity. Total transactions volume only grew by 4% in the twelve months to June 30th, which is much lower than would be expected given the strength of demand. This reduction in price inflation and activity comes at a time of rapid rental inflation and perhaps even more significantly a moderation in the pace of increase in construction activity.
At the time of writing, the future of the Help to Buy scheme was also uncertain, which is an unacceptable position, given the positive impact of this scheme on affordability and viability in the new homes market.
There is no doubt that the decisions made by policy makers in the coming weeks will have a very significant impact on the future of the housing market. For a stable housing market all participants need certainty. As such it is essential that we get a long-term solution that allows a steady supply of affordable houses to be built for all cohorts of society. This needs to be achieved through a notable and immediate increase in the supply of rental accommodation in all locations to control the pace of rental inflation and provide much needed accommodation to our growing population.”
If your thinking of selling your property , contact us today to arrange your FREE no obligation valuation
For any further information, please contact:
Sherry FitzGerald Group
Ph: 01 237 6500 / 086 252 3277
Sherry FitzGerald Group
Ph: 01 237 6341 / 086 814 8251